ID Theft: Corporate ID Theft, Case 1

If you think it's easy to steal some one's ID, you'll be really surprised how simple it is to steal the identity of a corporation. For this one, I'll bring in some personal experience.

One day, while in Washington, D.C. for an embassy party, I got a call from an FBI agent who said he needed some information on a borrower client of mine, from a few years earlier. The client had caused someone to wire my firm "some money", and he was investigating where it gone from there. I asked him to fax me his subpoena for my record, and to please give me the names by phone so I could begin the investigation.

The names associated did not sound familiar. "How much money was wired to us?" I asked.

"Nine hundred thousand dollars." His reply made no sense. I knew I would remember clients of such size. I told him I was suspicious.

The agent was quite seasoned, and knew enough to confirm the bank name bank account number of my operating account. I provided this, and he realized the account number had not matched. It was however, the a different branch of the same bank, in the same city as my branch. My company name and address had been used. I later double checked, to find I had no record of ever having received any such wire, and had no involvement with the named individuals.

So what happened?

Quite simply, someone had obtained a copy of the address articles of incorporation of my firm from public records, faked a list of officers, opened a bank account in the company name, pretended to be the company in offering like services, and got a client to wire them $900,000. for nothing. My corporate identity had been assumed. Their client (the mark) never saw the benefit of his $900,000. He thought he had been talking to the company, was made who-knows-what promises, wired money to the sammer when he thought he was wiring it to the real company, the rest is history.

Double Factor Fraud

This scam is designed for a merchant to rip off its factor. Amazingly simple, incredibly effective.

Narrative:

1. Merchant creates a factoring agreement to sell & its accounts receivable to a factoring house (a form of financing).
2. The factor records a UCC-1 financing statement to secure its position as holding the primary claim on all accounts receivable of the Merchant.
3. Merchant sells receivabes to factor, receiving cash up front. Factor bills the customers.
4. Suddenly, the Factor stops receiving payments on the invoices.
5. Factors contacts invoiced customers to attempt to collect, finding that they claim to have already paid.

What Happened?

1. The Merchant set up a second company, with a similar or the same name as the Factor.
2. Merchant has the new 'fake factor' company bill his customers immediately following the real Factor's bill, as an address correction. He might even offer a discount.
3. Customers pay the new fake factor, thinking they have paid the correct party.

Result:

Merchant has received the advance from the first factor, and the payment from the customer, getting paid 75%-80% more for each invoice, until he is found out. This is often done when the Merchant is on his way out of business.

Prevention:

Contact each customer prior to purchase. Make sure they understand that there is to be no assignment without your involvement. If you learn of one customer paying an imposter factor, the rest are too. Contact authorities and file a criminal scam report. You will likely be told to file a civil action to get an injunction.

Overpayment-Refund Check Scam

Also known as the Cashier's Check Scam, the latest iteration is slightly more sophisticated than predecessors.

Here's how it happens:

1. You advertise something for sale. It could be an item or a service. You advertise it on the internet, usually somewhere with no ID checking capacity, such as craigslist.
2. A potential buyer contacts you and expresses interest in your offer.
3. The buyer explains that they will provide a cashiers check or corporate check to pay in full.
4. To put you at ease, the buyer gives you all of the details of the cashiers check, or of the corporation and its corporate check on the way.
5. If you call the issuing bank to confirm the validity of the check, it may be validated. This only means that the check bears a real account number, routing number, and matching issuer name.
6. The buyer then tells you they have sent, or are sending an amount greater than the price of your offering. The overpayment, and that they need you to send the difference back to them, or pay it to a person affiliated with them, such as a son or daughter in your local area.
7. The check arrives as promised, for a larger amount than required.
8. You deposit the check as expected.
9. You wait for the check to clear. It does.
10. You refund the overpayment to the buyer.
11. The check later is returned by your bank, leaving your without the funds you sent to the buyer as overypayment.
12. The buyer is nowhere to be found.

What happened?

1. The "buyer" is a scammer, who had obtained the information on the check provided by copying it from an actual check, viewed by the scammer at sompoint.
2. The scammer then goes fishing for anyone who will accept the check of an overpayment.
3. With a "mark" in his sites, the scammer then forges the check or cashier's check. This is easily done with standard desktop publishing.
4. When you deposit the check, it clears the account of the unsuspecting owner of the account.
5. The company on who's bank account the check was drawn (the "maker") reports the fraudulend check to their bank.
6. The maker's bank retracts the payment, charging your bank for the amount cashed. Your bank then charges you.